Bitcoin will continue to outperform traditional assets in profits, says Bloomberg

Key facts:

Over the past two and a half years, the return on cryptocurrencies has grown 374 times.
Commodities have grown 59 times in profits, and bonds have fallen 10 times.

Bloomberg Intelligence notes today that, in the decade that began with 2020, bitcoin and cryptocurrencies will continue to outperform commodities, NASDAQ-listed stocks and US treasury bonds.

In a tweet published this Monday, Bloomberg shows that the Bloomberg Galaxy Crypto Index (BGCI), a weighted index that includes bitcoin and five other cryptocurrencies, it has returns seven times higher than the traditional assets mentioned since two years ago.

This notorious advantage of bitcoin (BTC) and other cryptocurrencies as an investment vehicle, occurs at a time when the BGCI index has fallen 71%, compared to its all-time high of November 2021.

The BGCI consists of the following cryptocurrencies: bitcoin (30%), Ethereum (ETH, 30%), XRP (XRP, 18.58%), bitcoin cash (BCH, 9.34%), litecoin (LTC, 6.63%) and EOS (EOS, 5.45%).

The chart below shows the BGCI (white) in contrast to the return of the Bloomberg Commodities Index (light blue), the Nasdaq 100 index (yellow) and the Bloomberg Index of US Treasury bond returns. UU.

Bitcoin’s performance against three traditional assets. Source: Bloomberg.

The commodities index includes energy (30.43%), grains (22.44%), industrial metals (17.53%) and precious metals (15.62%), among others. The Bloomberg Nasdaq Composite Index, on the other hand, contemplates a modification of the weighting of the Nasdaq 100 stocks, in which technology stocks have a weighting factor of 51%, consumer services 16%, the health sector 7.7% and the financial sector 7.4%.

All the variables mentioned are placed at the same starting point, at the beginning of 2020, so that their relative growth can be compared. The superiority of cryptocurrency returns is noticeable over the past 29 months, except for a brief period between March and May 2020, when the Covid-19 pandemic was declared.

In April and November 2021, the highest peaks of cryptocurrency performance occur, in which the BGCI showed increases of up to 1,300 times regarding the first of January 2020.

When traditional assets are considered, commodities grew 59 times in the indicated period, while the 100 companies grouped in the Nasdaq index show a joint growth of 42 times. In contrast, the Bloomberg index of US Treasury bonds is the only one that shows losses of ten times their value at the beginning of 2020.

Although the current bear season began in November 2021, that year closed with bitcoin returns of 60%, which doubled in performance to traditional assets, as reported by Criptonews.

Bitcoin is above traditional assets and sectors. Source: Bloomberg.

In this Bloomberg chart, commented by CriptoNoticias, the evolution of bitcoin returns is compared against a numerous group of sectors such as energy, bonds, and the S&P 500. It is also appreciated there that bitcoin surpasses as an investment a large majority of conventional assets.

Since the beginning of last year, the price of bitcoin has shown an increasing correlation with traditional assets, as we reported in this medium. Recently, the correlation of the bitcoin price with the Nasdaq index has increased. While with the S&P 500 index bitcoin shows a correlation of 0.52, with Nasdaq that coupling goes up to 0.82. This implies a greater sensitivity of bitcoin to the variations of the latter.

Within the decreasing trend of its price, bitcoin it has stabilized in recent days around USD 29,000, following an uptick in purchases. At the time of writing this article, the BTC quote is USD 29,738, according to the Crypto News price index.